Corporate Reputation And Earnings Quality

Abstract

<p class="MsoNoSpacing" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: "Times New Roman","serif"; font-size: 10pt;">Investor confidence and the quality of reported information are primary issues in our current financial reporting environment as a result of recent scandals and financial crises. Assessing the quality of reported financial information is an important issue for investors. Can investors use corporate reputation to assess earnings quality? This paper examines the association between corporate reputation and earnings quality. We use a public measure – “America’s Most Admired Companies” – as a proxy for corporate reputation. These firms are considered to possess superior reputation. A cross-sectional accruals-based measure proxies for earnings quality. We compare the firms listed on America’s Most Admired Companies of 2006 to a sample of control firms and find that sample firms have higher earnings quality than control firms. Our results should be of interest to managers who engage in behavior leading to or maintaining a positive corporate reputation, and to financial analysts who conduct research on the impact of corporate reputation on earnings quality. Moreover, our study can increase individual investors’ confidence in assessing the earnings quality of companies with a superior reputation. </span></p>

Corporate Reputation And Technical Efficiency: Evidence From The Chemical And Business Services Industries

“…These results add to other work that examines the relationship between reputation and financial F performance. This paper also extends the work of Luchs et al (2009) which established a positive relationship between reputation and the quality of reported performance. This paper explores the relationship between reputation and actual performance efficiency.…”

“…Research also views a good reputation as a unique asset to a firm. For example, Luchs et al (2009) find that reputation is positively associated with an improved quality of reported performance. We extend this recent work by exploring the relationship between reputation and actual performance.…”

The dark tetrad of personality and the accounting information quality: the moderating effect of corporate reputation

“…However, personality influences not only decision-making or accounting information quality, but also the internal environment that the CEO forms part of, which in this research is considered as the corporate reputation. Cao, Myers, and Omer (2012), Garrett, Hoitash, and Prawitt (2014), Gertsen, Van Riel, and Berens (2006), and Luchs et al (2009) found that corporate reputation positively influences accounting information quality. Thus, a strong reputation is expected to decrease earnings management and fraud.…”

“…Except for investor responsiveness to earnings, these dimensions and attributes are based on earnings management and fraud, in which there is honest or dishonest discretion when applying an accounting policy. Intentional manipulation reduces accounting information quality and adversely affects investor and analyst forecasts (Luchs, Stuebs, & Sun, 2009).…”

“…Based on literature (Amernic & Craig, 2010;Cao et al, 2012;Chaney et al, 2011;Dechow et al, 2010;D'Souza & Lima, 2015;Hegarty & Sims Jr., 1979;Jones, 2014;Li, 2010;Luchs et al, 2009;Rijsenbilt & Commandeur, 2013), this study aims to investigate the moderating effect of corporate reputation on the relationship between the Dark Tetrad of personality and accounting information quality.…”